Pope orders Vatican bank probe

BRUSSELS, Belgium — Pope Francis has appointed a special commission of inquiry to examine the affairs of the Vatican bank in the latest move to shed light on the operations of the secretive institution that has been mired by accusations of tax evasion and money laundering.

Last year, tourists were forced to pay with cash in the Vatican's shops and museums after the Italian authorities shut off the territory's access to credit cards over money laundering concerns at the bank, which is known officially as the Institute for Religious Works, or IOR.

In a statement, the pope said the inquiry into the IOR would enable him to "learn more about the legal position and activities of the Institute to enable their better harmonization with the mission of the universal Church."

Rumors linking the Vatican bank to shadowy slush funds, offshore accounts and money laundering by organized criminals and even terrorists have long cast a cloud over its finances.

In July, a report by a Council of Europe agency set up to tackle money-laundering and terrorist financing said the Vatican had made significant progress in cleaning up its banking system since reforms in 2010, but still fell short of compliance with international standards.

Following that report, Pope Benedict appointed German lawyer and banker Ernst von Freyberg as president of the IOR with a brief to restore the bank's reputation.

The first non-Italian to run the bank since it was founded during World War II, von Freyberg has denied stories that known mafia bosses, crocked politicians or international terrorists have accounts either in their own names or in anonymous numbered accounts.

"That is pure fiction. There are no numbered accounts. Since 1996 it is technically impossible in our system to set up a numbered deposit," he told Vatican Radio in an interview last month "It would also be against Vatican law. I have looked myself into the system and have done random checks, I haven’t found any trace of numbered accounts.”

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Von Freyberg said the bank has a balance sheet of $5 billion and 19,000 customers, most of them priests and nuns.

The new commission will seek to follow up on von Freyberg's work. It will be headed by Cardinal Raffaele Farina, former head of the Vatican Secret Archives.

Joining him are three other prelates and Mary Ann Glendon, a Harvard professor and prominent anti-abortion campaigner who served as US ambassador to the Vatican under President George W. Bush.